Whether through oil or non-oil exports, Nigeria appears to be underperforming considering its ambitions to achieve a trillion-dollar economy by 2030. Despite being Africa’s largest economy, Nigeria has yet to fully exploit its resources to foster widespread prosperity, with revenues from non-oil exports remaining relatively modest.
The country finds itself at an economic crossroads where income from crude oil alone appears insufficient to meet the needs of its rapidly growing population, leading to escalating poverty levels. According to data from the National Bureau of Statistics (NBS), out of Nigeria’s 227 million people, 133 million are classified as multidimensionally poor.
In the last quarter of 2023, petroleum oils and oils obtained from bituminous minerals dominated Nigeria’s export profile, accounting for over 81.23 percent of total exports, valued at more than N10 trillion. In contrast, non-oil exports amounted to approximately N1 trillion during the same period.
Despite a 38.5 percent increase in non-oil exports to N1.8 trillion in the first quarter of 2024 from N1.3 trillion in the same period of 2023, this growth is considered insufficient for a nation striving to reduce its reliance on oil.
Non-oil exports encompass a wide array of goods and services excluding petroleum products, such as manufactured goods, agricultural products, textiles, machinery, electronics, and services like tourism, software, and financial services.
To diversify its economy and bolster exports and overall economic growth, Nigeria can draw lessons from Asian nations. Singapore, for example, achieved rapid industrialization in the 1960s, transforming manufacturing into its primary economic driver. By the early 1970s, Singapore achieved full employment and later joined the ranks of Asia’s newly industrialising economies alongside Hong Kong SAR, the Republic of Korea, and Taiwan, China.
Today, Singapore’s economy thrives on robust manufacturing and services sectors, supported by significant investments in education and industrialization. As of 2022, integrated circuits ranked as Singapore’s top export, valued at $81.9 billion, according to OECD data.
In contrast, Nigeria’s efforts to diversify its economy and boost non-oil exports remain critical for sustainable economic development and reducing dependency on oil revenues.
According to World Bank data, Singapore boasts a gross national income per capita of $70,810 as of 2023 and is globally recognized for leading in human capital development. This indicates that a child born in Singapore today is projected to be 88 percent more productive than peers born elsewhere.
Another example of economic advancement through non-oil exports is Vietnam. Despite being classified as one of the world’s poorest countries in 1980—falling below Somalia, Ethiopia, and Madagascar—Vietnam has since achieved economic prosperity. By 2023, its Gross Domestic Product (GDP) soared by 104 percent to $433 billion from $212 billion in 2013, as reported by the International Monetary Fund. In stark contrast, Nigeria experienced a 37.5 percent decline in GDP, plummeting from $400 billion to $250 billion during the same period, potentially losing its status as Africa’s largest economy to South Africa.
Vietnam has not only increased its national income but also boosted per capita income by an average of 12.5 percent annually, rising from $359 in 2000 to $4,163 in 2022. This success has been fueled by a 15.9 percent annual growth in exports, escalating from $14 billion in 2000 to $371 billion in 2022. The country’s export diversification strategy has transitioned from primary commodities like coffee and coconuts to high-value electronics such as computers and mobile phones. This shift underscores Vietnam’s reliance on labor-intensive manufacturing in textiles and footwear, as well as capital-intensive sectors like electronics, now constituting 85 percent of its total exports compared to 42 percent in 2000, according to a recent report by Agora policy.
Addressing strategies for Nigeria to enhance its non-oil exports, Uchenna Uzo, a professor of marketing at Lagos Business School, emphasised agriculture as pivotal for industrialization and economic growth in Africa’s largest economy. He highlighted manufacturing and local production as crucial factors that could differentiate Nigeria, suggesting that improved infrastructure could attract diaspora investments.
Non-oil exports play a crucial role in diversifying economies heavily reliant on oil exports, contributing to economic stability and growth by reducing dependence on a single commodity. Oyebanji Oyelaran-Oyeyinka, Senior Special Assistant to the President of the African Development Bank, underscored the need for Nigeria to diversify its economy, particularly focusing on manufacturing and industrial sectors, to stimulate rapid growth and development. He emphasised that manufacturing drives demand across various sectors such as banking, transportation, infrastructure, insurance, and communication services.
Historically, rapid and sustained economic growth has been linked to industrialization and manufacturing production, highlighting the significance of non-oil sectors in fostering economic development.